| The day to day pressure in running a dental | | | | embezzlement was taking place, but failed to |
| practice is enormous, especially in today's | | | | disclose it. All employees with access to financial |
| economy when every dollar counts. Unfortunately, | | | | information and the opportunity to commit the |
| dentists spend most of their day practicing | | | | theft should be included in the investigation, |
| dentistry, instead of supervising their staff | | | | regardless of their employment record, length of |
| members who manage their dental practice. In | | | | employment, or position within the practice. No |
| this type of atmosphere, embezzlement can | | | | one should be exempt from investigation, including |
| thrive. | | | | a partner in the practice, if you have one. |
| According to industry statistics, approximately | | | | If you suspect that the loss is potentially large, or |
| forty percent (40%) of dental offices have been | | | | the theft appears to be complex, you should |
| or will become the victim of employee | | | | always seek the advice of legal counsel, a CPA, a |
| embezzlement. Recent studies indicate that | | | | computer data retrieval specialist, and other |
| employee embezzlement in a dental office has | | | | required experts to assist in the investigation. It |
| become so rampant that it accounts for a | | | | may be appropriate for such experts to be hired |
| majority of ordinary business losses suffered by | | | | by outside legal counsel in order to maintain |
| dentists. The average amount of employee | | | | privileged communication with the experts, and to |
| embezzlement from a dental office is | | | | avoid any appearance of a conflict of interest. |
| approximately $105,000 per incident, which is a | | | | At the early stages of an employee |
| staggering number. | | | | embezzlement claim, and depending on the extent |
| Listed below are signs employee embezzlement | | | | of the theft, you may wish to contact their |
| may be taking place: | | | | insurance agent in order to determine whether |
| * You fail to receive financial information in a | | | | you have employee dishonesty coverage. Most |
| timely manner | | | | insurance policies have strict time requirements |
| * Employees are resistant to any type of change | | | | for reporting an employee dishonesty claim. For |
| in the present accounting system | | | | substantial losses, an attorney should assist the |
| * You have large numbers of unexplained | | | | owner of a dental practice in determining whether |
| accounting adjustments | | | | insurance coverage may exist, and how much |
| * Your collections have slowed | | | | coverage may be available. |
| * Your cash deposits have declined | | | | Depending on the type of employee |
| * An employee refuses to take a vacation | | | | embezzlement, you may wish to interview |
| * A staff member resents your income or | | | | employees. However, you must ensure that the |
| lifestyle | | | | interview is conducted with appropriate regard for |
| * An employee always works late and/or takes | | | | confidentiality and without undue coercion or |
| work home | | | | duress, in order to avoid a false imprisonment |
| * You have employees who always seem to | | | | claim and other state law tort claims. The owner |
| have cash on hand, and/or appear to live above | | | | of a dental practice or the office manager should |
| their means | | | | never interview any employee without seeking |
| * An employee treats office procedures as an | | | | the advice of legal counsel. |
| annoyance | | | | Appropriate Disciplinary Action |
| Perform an Embezzlement Audit of your Practice | | | | Once the investigation has been thoroughly |
| If you suspect that an employee is embezzling | | | | completed, and if you have determined that |
| funds, there are three ways to initiate a practice | | | | employee embezzlement has actually occurred, |
| audit, and they are: (1) request that your | | | | you must decide what action you should take, |
| accountant perform a practice audit, or hire a | | | | including termination of the suspected employee. |
| forensic accountant that specializes in employee | | | | In certain ways, investigating suspected |
| embezzlement; (2) ask your accountant to design | | | | embezzlement is similar to investigating other |
| a brief self-audit process for you to follow; or (3) | | | | employee misconduct. The scope and manner of |
| perform an immediate, cursory, on-the-spot | | | | the investigation will depend in part on the size |
| random audit by pulling approximately 15 to 20 | | | | and complexity of the theft. Of course, as with |
| patient charts from the past week's schedule in | | | | any investigation, the employer's rights and abilities |
| order to confirm that the treatment performed | | | | to investigate the facts and circumstances |
| has actually been posted to each patient's | | | | surrounding the incident are intertwined with the |
| account. | | | | myriad of rights and protections conferred upon |
| If you Suspect Embezzlement in your Practice | | | | employees by federal and state law. |
| Anytime you suspect that you are the victim of | | | | An often discussed issue is whether a dishonest |
| embezzlement, you should seek legal advice | | | | employee's pension or profit-sharing plan may be |
| immediately. Your attorney should prepare an | | | | seized in order to repay the amount of money |
| investigation strategy, which should include | | | | that was embezzled. The Employee Retirement |
| working closely with your practice CPA, or an | | | | Income Security Act ("ERISA"), as construed by |
| outside forensic accountant. | | | | the courts, may very well prohibit any type of |
| When the owner of a dental practice is first | | | | garnishment, attachment, or constructive trust |
| confronted with the prospect of employee | | | | regarding an employee's pension or profit-sharing |
| embezzlement, there are four primary objectives, | | | | plan, even if an employee is terminated for |
| which are: (1) to determine whether employee | | | | embezzlement. However, an employee Amay@ |
| embezzlement has actually taken place; (2) to | | | | voluntarily request distribution of his or her plan in |
| determine the total amount and method(s) of the | | | | order to repay the amount that was stolen. |
| theft; (3) to remove the dishonest employee | | | | Extreme care must be used in order to avoid any |
| from the workplace [and take remedial actions to | | | | type of undue coercion or duress. |
| prevent employee embezzlement in the future]; | | | | Recovering the Losses |
| and (4) to recover the money or property lost. | | | | Depending on whether the loss is covered by |
| Conducting the Investigation | | | | your insurance policy, and if so, the amount of |
| It is extremely rare that an employee is actually | | | | the deductible, the owner of a dental practice |
| caught embezzling funds by direct observation. | | | | may wish to file a civil action against the dishonest |
| Most embezzlement cases are detected based | | | | employee in order to recover any type of loss. |
| upon initial circumstantial evidence, such as an | | | | However, the prospects of recovery (depending |
| inconsistent practice financial report or through a | | | | on the wrongdoer's assets) may not justify the |
| random audit. | | | | costs of litigation. Another avenue to consider is |
| If you suspect that employee embezzlement has | | | | criminal prosecution, which can be a very slow |
| taken place, one of the first things you should do | | | | process. It is important to note that civil lawsuits |
| is conduct an investigation with an attorney and | | | | and criminal prosecution are matters of public |
| CPA in private, and proceed with extreme | | | | record, and as a result, you must weigh the |
| confidentiality. The reason for this is twofold: (1) | | | | consequences of any adverse publicity. |
| to avoid exposure to defamation claims, and (2) | | | | Summary |
| to avoid premature disclosure of information to | | | | In today's market place, employee embezzlement |
| the wrong party. | | | | is rampant. However, with a little precaution, the |
| The next step is to identify employees (at every | | | | financial hardship of employee embezzlement can |
| level of the practice) that had access to financial | | | | be avoided. Also, with proper employee screening, |
| information and the opportunity to commit the | | | | proper control and oversight, as well as prudent |
| theft. Also, it is important that you identify | | | | financial control, a devastating financial loss can be |
| employees that may have known that | | | | avoided. |